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The ‘It could be worse’ rally

For instance, the latest jobs report from the U.S. Department Labor showed that employers across the country trimmed a total of 539,000 jobs from their payrolls in April. But it could have been worse.

Many economists predicted April job cuts to be in the 600,000 range. And the April figure was 23 percent lower than the 699,000 jobs eliminated in March. Perhaps even more important, it was the lowest monthly job-loss figure since last October.

Then there were the results of the stress tests of some of the nation’s largest banking firms, released by the government Thursday. The results showed that 10 of the 19 banking companies tested will need to raise a total of nearly $75 billion to weather a deeper recession.

However, the news could have been worse.

Several of the nation’s top banking firms were deemed sound enough right now that they don’t need to raise any additional money. They include JPMorgan Chase, American
Express and Goldman Sachs. Additionally, many investors were reportedly relieved that the amount of money needed to be raised by the 10 banking firms wasn’t more than $75 billion.

On Friday, the Dow Jones industrial average rose 164 points to over 8,500. It was the eighth week out of the past nine that the Dow ended Friday ahead of where it started on Monday.

We won’t attempt to predict whether the two-month-long rally will continue. Nor can we say whether the multitude of small upticks in various economic indicators really demonstrate that the worst of the recession is over, and we are seeing the beginnings of an economic recovery.